B-148046, APR. 25, 1962

B-148046: Apr 25, 1962

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TO THE FIRE GUARD CORPORATION: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 24. IT IS YOUR CONTENTION. IT IS URGED THAT SUCH REDUCTION IN PRICE COULD BE CONSIDERED ONLY IF AWARD OF A CONTRACT HAD BEEN MADE TO FYR-FYTER FOR THE ENTIRE QUANTITIES OF ALL ITEMS OF THE INVITATION UPON WHICH IT BID. WE FEEL THAT SUCH POSITION IS UNTENABLE. THE BIDDING DOCUMENT CONTAINS A PROVISION WHEREBY PROSPECTIVE BIDDERS ARE REQUESTED. FOUR BIDS WERE RECEIVED AND. SINCE YOUR OFFER WAS THE LOWEST. AWARD OF A CONTRACT FOR THE OPEN QUANTITIES WAS MADE TO YOU. IN ORDER FOR SUCH FIRMS TO BE ELIGIBLE FOR NEGOTIATION IT WAS STATED THAT THEY MUST HAVE SUBMITTED A RESPONSIVE BID AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NON-SET-ASIDE PORTION.

B-148046, APR. 25, 1962

TO THE FIRE GUARD CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 24, 1962, AND TO LETTERS DATED FEBRUARY 1 AND 21, 1962, FROM YOUR ATTORNEY, LOUIS S. HARDIN, PROTESTING AGAINST THE PROPOSED NEGOTIATION OF A CONTRACT BY THE DEPARTMENT OF THE AIR FORCE WITH THE FYR-FYTER COMPANY, UNDER INVITATION FOR BIDS NO. 40-604-62-536. IT IS YOUR CONTENTION, AND THAT OF YOUR ATTORNEY, THAT THE FOUR PERCENT REDUCTION IN PRICE OFFERED IN THE BID OF THE LATTER COMPANY, IF AWARDED ALL ITEMS BID UPON BY IT, SHOULD NOT BE USED IN DETERMINING THAT FIRM'S ELIGIBILITY FOR THE SET ASIDE QUANTITIES, SINCE AWARD OF A CONTRACT ON THE OPEN QUANTITIES HAS BEEN MADE TO YOUR CORPORATION. STATED OTHERWISE, IT IS URGED THAT SUCH REDUCTION IN PRICE COULD BE CONSIDERED ONLY IF AWARD OF A CONTRACT HAD BEEN MADE TO FYR-FYTER FOR THE ENTIRE QUANTITIES OF ALL ITEMS OF THE INVITATION UPON WHICH IT BID.

WE FEEL THAT SUCH POSITION IS UNTENABLE. THE INVITATION SOLICITED OFFERS TO FURNISH TWO LOTS OF FIRE EXTINGUISHERS OF 10 GALLON CAPACITY (ITEM 2), AND 20 GALLON CAPACITY (ITEM 8), IN ACCORDANCE WITH THE TERMS AND SPECIFICATIONS MADE A PART THEREOF, TOGETHER WITH OTHER RELATED ITEMS SUCH AS SPARE PARTS, MAINTENANCE AND ENGINEERING MANUALS, AND PHOTOGRAPHS OF THE EXTINGUISHERS. THE BIDDING DOCUMENT CONTAINS A PROVISION WHEREBY PROSPECTIVE BIDDERS ARE REQUESTED, ALTHOUGH NOT REQUIRED, TO OFFER AN OVERALL PRICE REDUCTION IN THEIR RESPECTIVE QUOTATIONS IN THE EVENT THE PROCUREMENT OFFICIALS MAKE AN AWARD TO ONE BIDDER FOR THE ENTIRE QUANTITIES BID UPON BY HIM. YOU DECLINED TO OFFER ANY QUANTITY DISCOUNT WHEREAS THE FYR-FYTER COMPANY OFFERED A FOUR PERCENT REDUCTION UNDER THE STATED CONDITIONS.

FOUR BIDS WERE RECEIVED AND, SINCE YOUR OFFER WAS THE LOWEST, AWARD OF A CONTRACT FOR THE OPEN QUANTITIES WAS MADE TO YOU. PARAGRAPH V OF THE SCHEDULE STIPULATED THAT QUANTITIES OF 927 EACH OF ITEM 2, AND 964 EACH OF ITEM 8 HAD BEEN SET ASIDE FOR AWARD ONLY TO BIDDERS LOCATED IN LABOR SURPLUS AREAS, OR TO SMALL BUSINESS CONCERNS. IN ORDER FOR SUCH FIRMS TO BE ELIGIBLE FOR NEGOTIATION IT WAS STATED THAT THEY MUST HAVE SUBMITTED A RESPONSIVE BID AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NON-SET-ASIDE PORTION. TAKING INTO CONSIDERATION THE FOUR PERCENT REDUCTION OFFERED BY FYR-FYTER, ITS NET PRICE QUOTED ON ALL ITEMS FALLS WITHIN THE 120 PERCENT REQUIREMENT. YOU URGE THAT SUCH REDUCTION SHOULD BE DISREGARDED BECAUSE THAT CONCERN DID NOT RECEIVE AN AWARD ON THE OPEN QUANTITIES AND, THEREFORE ITS "ALL OR NONE" BID BECOMES INAPPLICABLE.

SUCH ARGUMENT COMPLETELY OVERLOOKS THE FACT THAT, BY THE TERMS OF THE INVITATION, ONLY THE NON-SET-ASIDE PORTIONS WERE SUBJECT TO COMPETITIVE BIDDING. IF THE BID OF FYR-FYTER HAD BEEN LOW ON ALL OF THE ITEMS--- CONSIDERING IN SUCH EVALUATION THE FOUR PERCENT REDUCTION -- AN AWARD COULD AND SHOULD HAVE BEEN MADE TO IT. WE FIND NOTHING INCONSISTENT IN CONSIDERING THE SAME PRICES AND CONDITIONS OF ITS BID TO DETERMINE ELIGIBILITY AND PRIORITY STATUS FOR THE SET-ASIDE QUANTITIES. THE WHOLE SET-ASIDE PROCEDURE CONTEMPLATES AWARD BY NEGOTIATION TO A FIRM OR FIRMS WHOSE BIDS ON THE NON-SET-ASIDE PORTIONS MAY NOT ENTITLE THEM TO AWARD OF ANY NON-SET-ASIDE ITEMS.

A FURTHER CONTENTION MADE BY YOUR ATTORNEY IN HIS LETTERS OF FEBRUARY 1 AND 21, 1962, CONCERNS PARAGRAPH 8 (C) OF THE TERMS AND CONDITIONS OF THE BID WHICH PROVIDES THAT "THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY BID UPON AT THE UNIT PRICES OFFERED UNLESS THE BIDDER SPECIFIES OTHERWISE IN HIS BID.' CONCLUDES THAT, IN THE LIGHT OF THAT LANGUAGE, IT IS THE UNIT PRICE WHICH GOVERNS AND NOT THE OVERALL PRICE FOR ALL ITEMS, WITH THE RESULT THAT FYR- FYTER COULD QUALIFY FOR NEGOTIATION ONLY UNDER ITEM 2 OF THE BID. IT MUST BE REMEMBERED THAT THE GOVERNMENT ITSELF SOLICITED BIDS BOTH ON A UNIT PRICE BASIS AND ON AN ALL OR NONE BASIS. THAT BEING SO, THE QUANTITY DISCOUNT OF FOUR PERCENT WHICH "THE BIDDER SPECIFIES OTHERWISE IN HIS BID" IS PROPER FOR CONSIDERATION IN THE EVALUATION OF ITS BID, AND MAY ALSO, IN OUR OPINION, PROPERLY BE CONSIDERED IN DETERMINING ELIGIBILITY FOR THE SET ASIDE.

IN VIEW OF THE FOREGOING WE PERCEIVE NO BASIS FOR QUESTIONING THE ADMINISTRATIVE ACTION PROPOSED.